Tax collected but not paid to Government
Section 76, CGST Act
Straight from CBIC
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Section 76 says anyone who collected an amount ‘as tax’ from another person must pay it to the government at once, whether or not the underlying supply was actually taxable, along with interest and a penalty equal to the amount. The adjudication order must be passed within one year.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
It bites on anything collected ‘as tax’, even where the supply was exempt or the rate charged was too high – the amount belongs to the Government, not to the collector.
Penalty equals the amount collected, and interest runs from the date of collection, so the exposure is roughly double the sum wrongly charged.
The surrendered amount can be refunded to the person who actually bore it, which is where the unjust-enrichment enquiry comes in.
Questions people actually ask
Real questions we get on this provision, answered straight.
We charged 18 per cent where the correct rate was 5 per cent. What now?+
The excess collected as tax has to be paid to the Government under section 76 with interest, unless you have already deposited it in your returns. If the customer has borne it, the refund route belongs to him, not to you – issue a credit note within the section 34 time limit instead of holding the money.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
2,718 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
Read the full provision+
(1) Notwithstanding anything to the contrary contained in any order or direction of any Appellate Authority or Appellate Tribunal or court or in any other provisions of this Act or the rules made thereunder or any other law for the time being in force, every person who has collected from any other person any amount as representing the tax under this Act, and has not paid the said amount to the Government, shall forthwith pay the said amount to the Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or not.
(2) Where any amount is required to be paid to the Government under sub-section (1), and which has not been so paid, the proper officer may serve on the person liable to pay such amount a notice requiring him to show cause as to why the said amount as specified in the notice, should not be paid by him to the Government and why a penalty equivalent to the amount specified in the notice should not be imposed on him under the provisions of this Act.
(3) The proper officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (2), determine the amount due from such person and thereupon such person shall pay the amount so determined.
(4) The person referred to in sub-section
(1) shall in addition to paying the amount referred to in sub-section
(1) or sub-section
(3) also be liable to pay interest thereon at the rate specified under section 50 from the date such amount was collected by him to the date such amount is paid by him to the Government.
(5) An opportunity of hearing shall be granted where a request is received in writing from the person to whom the notice was issued to show cause.
(6) The proper officer shall issue an order within one year from the date of issue of the notice.
(7) Where the issuance of order is stayed by an order of the court or Appellate Tribunal, the period of such stay shall be excluded in computing the period of one year.
(8) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
(9) The amount paid to the Government under sub-section
(1) or sub-section
(3) shall be adjusted against the tax payable, if any, by the person in relation to the supplies referred to in sub-section (1).
(10) Where any surplus is left after the adjustment under sub-section (9), the amount of such surplus shall either be credited to the Fund or refunded to the person who has borne the incidence of such amount.
(11) The person who has borne the incidence of the amount, may apply for the refund of the same in accordance with the provisions of section 54 .
High Court cases on this section
Judgments in our index that cite this provision. Being listed does not make a case good law — it may have been appealed or distinguished since. Read it before relying on it.
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2017-07-01 · Commenced
Provision as originally enacted in the CGST Act, 2017 (Act 12 of 2017) and brought into force w.e.f. 01-07-2017.
Read this with
A provision rarely works alone. These are the ones it points to.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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